Wednesday, April 04, 2007

Buy low, sell high – Building links with Iran

A few weeks ago, Saikor wrote a piece on Iran. The latest UNSC sanctions and Iran’s capture of 15 British soldiers lately brings the scenario he painted about the possibility of war in Iran a couple of steps closer to reality.

At this time when Iran is increasingly being portrayed as a pariah nation, it is interesting to note that Singapore is building up links with Iran, as SM Goh Chok Tong’s recent visit would indicate. As a former PM and Chairman of MAS, the signature of SM Goh’s visit demonstrates Singapore’s economic interest in Iran.

And why not? While per capita income may be low, Iran is a wealthy country (ranked abt 19th in GDP terms) thanks mainly to rich oil resources. With the government trying to diversify the economy and stem unemployment, there is much that a recently rapidly developing economy like Singapore could offer in terms of consulting services and trade.

This brings to mind the scenario in the 1960s, when Singapore sought Israel’s help in building up its defence capability. I was not around then, but it must have been a edgy decision. Israel was embroiled in its own difficulties in its part of the world (and perhaps very much still is). Singapore was surrounded by stronger and much larger Muslim countries, who might have responded with economic sanctions or worse. As it turned out, it was a fortuitous decision.

At this point, Iran’s stock is low. There are relatively few competitors for Singapore businesses, although Japan, China and several other countries have long-standing economic links with Iran. As per the adage to “buy low and sell high,” Singapore is clearly looking to invest – economically and/or politically – in Iran at a low point, and hopefully cash out at a high. It might seem to go against better judgment to be seen hobnobbing with the Iranians at this point, but Singapore clearly has a history of abhorring diplomatic common sense in favor of national interests when the two collide.